Japan moves toward putting its money on a casino culture

Japan could become the world's third-largest gambling market if lawmakers pass a bill legalizing casinos. A drive to boost tourism – especially before the 2020 Olympics – is behind the move, but opponents worry about addiction and social ills.

Issei Kato/Reuters

Visitors play Pachinko, a Japanese form of legal gambling, at Dynam Japan Holdings Co.'s Pachinko parlor in Koga, north of Tokyo April 7, 2014. Prime Minister Shinzo Abe's government is moving toward legalizing casinos in Japan.

Japan’s gamblers could soon be putting on their best poker face at tables on their home turf.

After years of stalling, the government – with the unprecedented backing of the prime minister, Shinzo Abe – appears ready to place a bet on legalizing casinos. Lawmakers are discussing a bill that will likely make casinos legal by the end of the year, with more legislation laying out regulations expected to pass next year.

The move comes as part of a raft of measures designed to boost economic growth. Spying a hole in Japan’s otherwise mature entertainment market, government officials believe regulated casinos and vast casino resorts will go a long way toward doubling the number of foreign visitors to more than 20 million by the end of the decade – and satisfy what they say is a huge, but as yet untapped, domestic demand ahead of the 2020 summer Olympics in Tokyo. They envision a $40 billion market by 2025.

The appearance of poker tables in major cities would hardly be Japan’s first brush with gambling. Betting on horse, motorboat, and bicycle races is legal, and pachinko, a pinball-type arcade game in which prizes can be exchanged for cash off the premises, is played regularly by an estimated 11 million people, generating almost 30 trillion yen a year (about $296 billion) – bigger than the economy of New Zealand. Yet gambling has historically provoked unease here, and opponents are seizing on the casino debate to raise concerns about addiction, social ills, and the potential for organized crime to find new spaces in which to thrive.

“Japan has very deep historical and cultural and legal resistance to gambling,” says Mark Schreiber, a media commentator who writes about Japanese social trends. Mr. Schreiber cites official warnings to samurai against the “evils” of gambling going back to the early 1600s. “The Tokugawa shogunate was constantly pursuing and prosecuting gamblers, and there was even a law stipulating that big losers at gambling could claim restitution,” Schreiber says.

Despite the purism of the shogunates, however, postwar Japan embraced gambling – with the notable exception of casinos – with the first commercial pachinko parlor opening in Nagoya in 1948.

Looking for a showcase

Today, early bets are now being taken on where international operators will choose to build Japan’s showcase casino resort.

Despite being Olympic host city-in-waiting, Tokyo appears to have lost out to Osaka, a western port city whose economic development, fittingly, owed much to the keen commercial sense of its people. “Mokarimakka?” ("Are you making money?") is, for some Osaka merchants, still preferred to a simple “Hello.”

That may be because Tokyo’s new governor, Yoichi Masuzoe, has indicated he doesn’t share his two predecessors' enthusiasm for bringing Japan’s first casino to the Tokyo Bay waterfront.

“There are pros and cons. Many women in Tokyo are against the creation of casinos and they think about the bad influences they have,” he told reporters last month.

Toru Hashimoto, his counterpart in Osaka, however, has been discussing the possibility of building a casino on the manmade island of Yumeshima, a government-led development project that became a victim of the bursting of the bubble economy in the early 1990s.

Supporters of the casino legalization bill say the venture would not cater exclusively to gamblers, but combine hotels, restaurants, and leisure activities, following the path taken by Marina Bay Sands in Singapore and and other lucrative casino resorts in Asia.

The prospect of venturing into what would become the third-biggest gambling market in the world after the United States and Macau has foreign casino operators, such as Las Vegas Sands and MGM Resorts International, rubbing their hands in anticipation of securing their first Japanese license.

Las Vegas Sands has said it is reportedly ready to invest $10 billion in Japan as soon as the casino ban is lifted, while other operators are reportedly in talks with local real estate developers.

Moral safeguards

Some parliamentarians involved in drafting the bill voiced concern about the expected rise in addiction in a country where an estimated 1 in 10 male gamblers are addicted. In response, they have suggested using some of the tax take from casinos to fund counseling services. The draft of the bill acknowledged that casino resorts “require consideration of policy measures to prevent crime, maintain safety, ensure healthy development of youngsters and prevent addiction.”

But Takeshi Iwaya, a lawmaker from the ruling Liberal Democratic Party who supports the bill, said he wasn’t satisfied with the legislation’s “moral” safeguards.

“We strongly believe that not enough has been done in terms of studying and addressing gambling addiction," he told a lower house committee last month.

Schreiber, though, played down fears that the arrival of casinos would create a new sphere of influence for Japan’s yakuza crime syndicates.

“It's not so much organized crime that worries some people than concerns over a possible shift in power,” he says. “The legalization of gambling will bring in huge amounts of money, and those who control it will eventually be able to wield enormous political power – depending on where it accumulates – in ways that that can't easily be foreseen.”

Bringing gambling into the open

Masayoshi Oiwane, principal of the Japan Casino School in Tokyo, believes legalizing casinos will quickly put the yakuza-run underground establishments that dot the nightlife districts of major cities out of business.

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“People who want to gamble will no longer have to go to those places, so the sooner we get legal casinos opened here the better,” says Mr. Oiwane, whose graduates must use their skills overseas, on cruise ships, or at “casino parties” where cash bets are forbidden.

“I get the feeling that if legalization doesn’t happen now, it never will. Until Abe, no prime minister had publicly supported it. That, and the Tokyo Olympic effect, mean I’m more hopeful than ever.”

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